It's bad form to answer my own question, but the comments have reveals that the question was flawed. First of all, OJFord is right to point out that this is an OEIC and not an ETF. Furthermore, the question assumed that the dividend date was when the dividends accumulated from the fund's underlying stocks were reinvested. However, if you compare any accumulation class fund's percentage change in price (and not total return!) with its income class equivalent, you will see that this is usually false. For example, with the accumulation class in red and the income class in blue, this graph is what we get from the question's linked fund, showing that the divergence was only triggered by the ex-dividend date (mid May, with the dividend in mid July). This also implies that the dividends from the accumulation class were reinvested on the ex-dividend date, destroying the premise of the question.
So why does this confusion exist? This takes some background work. Ignoring the ex-dividend date for a moment, here is my understanding of how the dividend payments work for accumulation units in an OEIC:
- As stated in the question, for an accumulation class fund neither you nor your broker get told what the value of the dividend was. There is a date when it's supposed to become relevant, the dividend date, but this is misleading because you won't see the dividend and it may have been reinvested at any prior point on or after the ex-dividend date. Ultimately, for accumulation type funds, the dividend date is little more than a tax/accounting detail.
- If you want to find out what the dividend's value really was, you need to find the official documents from the fund. As with the example linked in the question, these confirm that a dividend exists and is reinvested back in to the fund. They also give its value. Incidentally, it's unclear to me if the tax man cares about this, so beware!
With this key fact - that the dividend is never seen leaving the fund - established, we can now ask the question that we were trying to answer: If the only thing that changes due to the fund's dividend is the unit price of the fund, why does the ex-dividend date matter? After all, I'll benefit from the change in unit price regardless of if I buy before of after the ex-dividend date.
Our answer to this is equalisation. That link explains it better than I can, but here is how it applies to this question:
- Over time, the fund will accumulate cash due to the dividends that are paid to it from the shares that it owns. These are not reinvested until at least the ex-dividend date. However, the fact that the fund has this cash increases the value of the fund. Of course, some of this cash will be used to cover costs like staff expenses, but the important part is that...
- On the ex-dividend date, a great deal of this cash is set aside for the purposes of dividend payment (or in our case of accumulation units, dividend reinvestment). As this cash is now committed somewhere, unless it is reinvested back in to the fund immediately (as it was in the question's linked example), the value of the fund goes down.
- However, the fund will probably still be getting dividends paid to it from its underlying shares, so even before the dividend date, the value of the fund will start going back up. This continues until the next ex-dividend date.
- This means that if you buy in to the fund between two ex-dividend dates, you are paying extra because of the cash that the fund has got sitting around.
Technically speaking, this has already answered the question. The ex-dividend date matters because it has a clear effect on the price of the fund. However, there is a final loose end that we should clear up.
As this question points out, everyone benefits equally from the change in unit price when the dividends are reinvested. However, the funds recognise your overpayment and equalisation is the fancy name for how they compensate for this. On or very near the date of reinvestment, the amount that you are recorded as having paid for your investment will be revised down in proportion to how much you overpaid (i.e. your proximity to the upcoming ex-dividend date). In my experience, your unit number and price will not change when this happens and your account won't be credited either. It's always been a case of the fund saying "we recognise that you overpaid by x amount, so we've reinvested it back in to the fund. As you're invested with us, everybody wins". And that's the end of the story!
- Yes, everyone benefits equally (per share) from the dividend regardless of when they buy, as long as they buy before it is reinvested.
- No, this does not mean that the ex-dividend date doesn't matter. The unit price of the fund will typically drop notably on it and you will overpay (albeit with some unusual compensation) if you buy in after it.